Fewer than 10% of Family Offices survive beyond the third generation.
Let that sink in for a moment. This startling statistic is more than just numbers. I have first-hand witnessed a dying legacy and its impact throughout my life — first, as a child growing up in a family business, and later being married into one.
Miscommunication between generations can negatively influence your Family Office and family business. First, miscommunication between generations can result in inefficient alternative investment decisions, and second, harbour a sense of isolation among family members.
Family or Business?
When business and family life intertwine, the struggles and conflicts cut deeper than mere numbers. This issue transcends the fiscal realm, affecting relationships, emotional well-being, and the legacy that we expect to leave behind.
Growing up, I felt the struggle, the isolation, and the hurt inflicted by this intersection. My childhood family dinners were budget discussions and business meetings. This created an environment where love and profit seemed to be at odds.
Business isn’t personal, right? But with a family business, it is.
I sought refuge in the corporate world, where I believed the separation between professional and personal life would protect me from the heartache I experienced growing up. For a while, it worked. My career flourished. I enjoyed the clarity that came with knowing my professional and personal lives were distinct entities. But life has a way of bringing you full circle, often when you least expect it.
It’s almost a cosmic joke how life thrust me back into a family business. When I married, once again, I found myself entangled in the complexities of a family business.
This time, however, I was on the inside and outside looking in, feeling, and observing its impact on my new family. Over the years I watched the business, have the potential to be a unifying force, instead drove wedges between my boys, their father, and each other. The same issues that plagued my family growing up were unfolding in front of my eyes. This led me to question this flawed pattern to stop the cycle of conflict and isolation.
What Makes Family Businesses Unique?
I realized that family businesses bear a weight that ordinary businesses do not.
Balancing business needs with family dynamics is a delicate act, and the stakes are deeply personal.
When family businesses establish Family Offices, their aim is two-fold business prosperity and legacy longevity. This covers the financial and other aspects. This family pride, while positive, can create significant challenges in decision-making. These challenges take root in one clear issue: miscommunication.
Everyone wants to feel heard and understood. Yet, with the filial piety underpinning alternative investment decision-making, there is a lot more at stake when stating an opinion or a fact!
How do you tell a parent, or grandparent they are wrong? Can you tell that their ideas are antiquated? Is it easy to say that their ideas may have worked years ago but in today's world, the business world changes constantly? And vise versa, how does a matriarch, or patriarch explain to a grandchild who is well versed in technology and modern business the foundational values they don’t want to lose? When emotion and expectations trump data, the complexity of communication starts unfolding. This fact contributes to the failure of 90% of Family Offices.
Navigating the Family Office Dynamics
The realization of the critical need for a single source of truth sparked a vision for the seamless integration of ideas, opinions, and data in one platform. With a centralized system, all information, decisions, and communications find one accessible place. Such a system ensures that everyone has the same access. This allows for the sharing of passion, values, and wisdom, leveraging diverse perspectives.
Compiling data is only one step of creating a single source of truth - it's about fostering effective communication. The language used in discussions must be inclusive. An inclusive approach ensures the best possible outcome for democratizing decisions.
The journey begins with transforming our belief systems such as:
Old Belief: Believing that one's way is the best due to personal knowledge and experience.
New Belief: Recognizing that the wisdom found in stories and experiences fosters a new, inclusive language.
When Family Offices embrace diverse perspectives from various ages, experiences, and knowledge bases, they become a powerful asset rather than a source of conflict.
Benefits of a Single Source of Truth for Family Offices
The Streeter Family Office has a longstanding history of successful real estate investments. Siena, the matriarch of the Streeter Family Office, is known for her sharp investment acumen. She has always prioritized real estate and revitalizing outdated properties and neighborhoods. Under her leadership, the Family Office has flourished and built a robust portfolio by leveraging traditional real estate investments.
Siena’s grandson, Jack is actively involved in the family business. Jack values cutting-edge technologies in real estate, also known as Property Technology (PropTech). He sees PropTech as an innovative way to incorporate sustainable and climate-conscious practices into their real estate ventures. Jack envisions leveraging PropTech to enhance their properties' efficiency, sustainability, and profitability. However, Siena is skeptical about the new technology, seeing it as a deviation from their successful traditional methods. Her lack of understanding of PropTech leads her to dismiss Jack’s proposals. This collision creates a rift in their strategic vision.
Jack feels marginalized and unheard, despite his conviction that PropTech can align with Siena's environmental values while modernizing their alternative investment strategy. His frustration grows as he sees innovation opportunities to stay ahead of industry trends being missed. On the other hand, Siena remains unconvinced of the necessity and potential benefits of integrating a new technology. Her fears play a significant role in her decision. She is skeptical of the risks related to deviating from proven investment strategies.
Jack and Siena need a way to create a single source of truth. With this single source of truth, they realize their values are more aligned than they thought. They just got lost in intergenerational translation. Imagine Jack and Siena approaching this situation with open minds and stronger communication:
This is where Equati comes into play as a Family Office software designed to create a structured environment for all Family Office members. This turn-key solution ensures the inclusion of all stakeholders and decision-making with inclusivity in mind. Equati focuses on democratising decisions, allows everyone in the Family Office to vote and voice their knowledge and opinions on their alternative investment opportunities. This unprecedented approach blends facts and figures with emotion to improve values alignment.
Equati’s structured environment enables Family Office to operate with a unified vision, inclusive communication, and a collaborative culture.
Honor your legacy by ensuring clarity and truth in your communications. Never let miscommunication be the reason your Family Office becomes part of the statistic. Take a step to transforming your belief systems and embracing inclusive language with Equati!
*Photo by Elena Mozhvilo on Unsplash
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